A construction company that was the target
of a union protest rally that created havoc in midtown Manhattan
15 months ago has effectively signed a peace accord with the city's
unions by agreeing yesterday to become a unionized operation.

Union leaders hailed the decision by the
construction company, Roy Kay Inc., to use only union workers
and to let the 200 workers it regularly uses join various building
trades unions.

Roy Kay's $32.6 million contract to build
a subway command center in midtown Manhattan had become a flash
point for the city's labor unions, which were angry that many
building contractors were relying on nonunion labor and were thus
undercutting union contracts.

Labor leaders said Roy Kay, based in Freehold,
N.J., agreed to become a unionized company and to sign two consecutive
three-year collective bargaining agreements because it faced so
many union protests and because unions were lobbying to bar it
from receiving government contracts.

On June 30, 1998, more than 20,000 construction
workers paralyzed traffic in midtown and clashed with police officers
as they staged a protest against Roy Kay's role in building the
subway control center for the Metropolitan Transportation Authority.

At a news conference yesterday, LeRoy Kay,
the company's president, said, "We consider this resolution
to be in the best interests of our company and its employees and
believe this decision will allow us to pursue opportunities in
the New York market."

He said he decided to turn his company into
a unionized operation after many of his workers indicated their
desire to join a union.

Anthony Silveri, a business manager of the
Mason Tenders Council of Greater New York, which represents thousands
of construction laborers, said a shortage of skilled construction
workers also played a role in persuading Roy Kay to become unionized.
Mr. Silveri said that many construction workers were reluctant
to work for nonunion companies because of reduced benefits and
often lower wages. "There's such a limited amount of skilled
people, even for union contractors, that he had no option,"
Mr. Silveri said. "Nonunion contractors are at a real disadvantage
now in keeping people on."

He said that Mr. Kay's son David said at
a meeting yesterday that he looked forward to the day when the
company could operate free of stigma and union protests.

For the last year, unions have urged state
officials to disqualify Roy Kay from government contracts. Union
leaders provided state officials with evidence showing that Roy
Kay had committed safety violations and had failed to pay the
prevailing wage to its workers, as is required in many government
contracts.

Struggling not to be disqualified, Roy Kay
officials said the company's safety and wage violations were minor
and no worse than those of many other contractors.

As part of the agreement signed yesterday,
Roy Kay agreed to drop several lawsuits against labor unions that
sought millions of dollars and accused them of illegally interfering
with its operations.